Term
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Definition
| the process of identifying, measuring, and communicating economic information about an organization for the purpose of making decisions and informed judgements |
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Term
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Definition
| economic interchanges between entities |
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Term
balance sheet
(statement of financial position) |
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Definition
a listing of the organization's assets, liabilities, and owner's equity at a point in time
Assets = Liabilities + Owners' Equity |
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Term
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Definition
anything you or a company owns
"the amount of resources owned by the entity"
-Building
-Cash
-Inventory |
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Term
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Definition
any amount that you or a company owes
"the amounts owned to other entities"
-accounts payable
-notes payable |
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Term
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Definition
any amount or value that owners have invested into a company
"net assets"
-Paid in Capital
-Retained Earnings |
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Term
Income Statement
(statement of earnings) |
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Definition
answers the question: Did the entity operate at a profit for the period of time under consideration?
Revenue - Expenses = Net Income |
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Term
| Statement of Owners' Equity |
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Definition
"statement of changes in retained earnings"
Beginning balances
+Net income
-Dividends
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(Ending balances = "Retained earnings") + Paid-in capital changes = total owners' equity |
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Term
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Definition
used to identify the sources and uses of cash during the year
Operating activities
Investing activities
Financing activities
+Beginning cash balance
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Ending balance = "Cash" |
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Term
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Definition
value of what was sold by company
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Term
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Definition
value that's been consumed
-Administrative Expenses
-COGS
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Term
Return on Investment
(return on assets)
ROI = Net Income / Avg Total Assets |
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Definition
the label usually assigned to the rate of return calculation made using data from financial statements
"the ROI of a firm is significant to most financial statement readers because it delscribes the rate of return management was able to earn on the assets that it had available to use during the year" |
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Term
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Definition
| set prices, manage costs, manage daily operations |
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Term
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Definition
| invest, hold or sell shares |
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Term
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Definition
| lend money or sell on credit |
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Term
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Definition
| long-term prospects, benefits |
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Term
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Definition
can change per use
-supplies used in production
-manufacturing labor wages (hourly)
-shipping costs
-sales commissions
-utilities |
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Term
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Definition
does not change
-salary
-rent
-advertising
-property taxes |
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Term
Contribution Margin
CM Model |
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Definition
the contribution to fixed costs and operating income from the sale of products
Revenues - Variable Costs |
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Term
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Definition
the amount of revenue that must be realized for the firm to have neither profit or loss
operating income = 0 |
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Term
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Definition
used to determine inventory values and the amount of COGS
-direct materials
-direct labor
-manufacturing overhead |
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Term
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Definition
ingredients in every product in the same amount every time
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Term
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Definition
| those who do the manufacturing work of the product |
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Term
| Manufacturing Overhead Costs |
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Definition
| used or consumed but not directly measured |
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Term
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Definition
| (price - VC per unit) x volume - FC |
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Term
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Definition
1)sales budget (forecast)
2)purchases or production budget
3)operating expenses budget
4)budgeted income statement
5)cash budget
6)budgeted balance sheet |
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Term
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Definition
| sales (in units) x selling price per unit = total sales |
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Term
| Purchases or Production = |
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Definition
| quantity sold - beginning inventory + ending inventory |
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Term
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Definition
cost behavior patterns of selling, general, administrative, and other operating expenses are determined
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Term
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Definition
"budgeted statement of cash flows"
beginning cash balance + cash reciepts: total cash available - cash disbursements = ending cash balance |
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Term
| Budgeted Income Statement |
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Definition
Revenue - Expenses = Net Income
sales revenue
-COGS
-salaries
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Net Income |
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Term
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Definition
| income - (total committed expenses + total discretionary expenses) = net cash flow |
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